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TMI Blog2004 (1) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ulphur Di-oxide gas is nothing but a by-product in the process of manufacture of zinc/lead. It is, apparent from the provisions of Rule 57D(1) of the Rules that credit shall not be denied on the ground that part of the inputs is contained in a by-product. It is also not disputed that by-product in the present matter, namely, Sulphur Di-oxide gas is taken to Sulphuric Acid Plant for converting the same into Sulphuric Acid. The issue in the present matter is not whether the process undertaken by the appellants to get Sulphuric Acid amounts to manufacture or not. The issue involved is whether the Modvat Credit of the duty paid on LDO is to be denied proportionately as the Sulphuric Acid, which has already been obtained by the appellants is exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture of exempted product and that when Sulphuric Acid is removed without payment of duty, credit on inputs proportionate to its use in the manufacture of Sulphuric Acid, should be reversed. The learned Advocate, further, submitted that admittedly the Sulphuric Acid is only a by-product and there are number of decisions wherein it has been held that credit cannot be denied when the inputs are used in the manufacture of final product and by-products are generated. He has relied upon the following decisions : (i) Gas Authority of India v. CCE, Kanpur - Final Order No. A/402/2003-NB(C), dated 2-7-2003; (ii) IOC Ltd. v. CCE, Lucknow, 2003 (54) RLT 630; (iii) Hi-tech Carbon v. CCE, Allahabad, 2003 (161) E.L.T. 407 (T) = 2003 (56) RLT 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the decision in the case of C.C.E. v. India Gelatine and Chemical, 1996 (88) E.L.T. 425 (T) wherein it has been held that frequency and regular intervals at which sludge and dust was cleared does suggest that these products were not mere waste but were subsidiary products turned out regularly and continuously during the course of manufacture and were sold regularly. He, therefore, contended that the Modvat credit is not allowable on the quantity of LDO which has gone into the manufacture of exempted product, namely, Sulphuric Acid. 4. We have considered the submissions of both the sides. It has not been disputed by the Revenue that LDO, in respect of which Modvat Credit has been availed of by the appellants, is used in the Smelting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of products, which are exempted from the whole of the duty of Excise or is chargeable to nil rate of duty. The mere fact of using Sulphur Di-oxide for making Sulphuric Acid will not tantamount to using the modvatable inputs in the manufacture of exempted products i.e. Sulphuric Acid. This was the view expressed by the Tribunal in the case of Hi-tech Carbon (supra) where the appellants were availing Modvat Credit of the duty in respect of carbon black feed stock for the manufacture of carbon black; that during the process of manufacture, off gases were generated. These off gases were used by the appellants to generate steam. The Tribunal, after relying upon the decision in the case of Aarti Drugs Ltd. (supra) has held that pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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